Naveen Rao, who recently led artificial intelligence efforts at Databricks, is reportedly raising $1 billion for a new company named Unconventional, Inc. According to sources familiar with the matter, the funding round values the startup at $5 billion and aims to develop a new type of computer designed to power AI systems, positioning it as a potential competitor to industry leader Nvidia.
The ambitious venture has attracted significant interest from top-tier investors. Venture capital firm Andreessen Horowitz is set to lead the investment, with Lightspeed Venture Partners and Lux Capital also participating in the deal. Rao's former employer, Databricks, is also reported to be an investor in the new company.
Key Takeaways
- Naveen Rao, former AI head at Databricks, has launched a new startup called Unconventional, Inc.
- The company is in talks to raise $1 billion in funding at a $5 billion valuation.
- Andreessen Horowitz will lead the investment, joined by Lightspeed, Lux Capital, and Databricks.
- Unconventional, Inc. aims to build novel AI computers with custom silicon, challenging established players like Nvidia.
- Rao has a history of successful ventures, including MosaicML (acquired for $1.3B) and Nervana Systems (acquired for over $400M).
A New Vision for AI Computing
Unconventional, Inc. plans to fundamentally rethink computer architecture to create more efficient hardware for artificial intelligence. The company's goal is to design a complete system that includes both custom silicon chips and the server infrastructure needed to run them. This integrated approach is intended to provide a powerful and efficient alternative to current market offerings.
While Rao has declined to comment directly on the funding, he publicly confirmed the startup's existence and mission on the social media platform X. He described the company's objective as “rethinking the foundations of a computer to build a new substrate for intelligence that is as efficient as biology.”
“Brain Scale Efficiency without the biological baggage!” Rao stated in a post, highlighting the company's focus on mimicking the efficiency of biological systems in a hardware format.
This vision directly targets the growing demand for specialized AI hardware. As large language models and other AI systems become more complex, the need for more powerful and energy-efficient computing solutions has intensified. Unconventional's strategy appears to be a direct challenge to Nvidia, which currently dominates the market for AI accelerator chips.
The Competitive Landscape
The market for AI chips is currently dominated by Nvidia, whose GPUs have become the industry standard for training and deploying large AI models. However, the high demand and cost of these chips have created an opportunity for new companies to enter the space. Startups and established tech giants alike are investing billions in developing custom silicon (ASICs) designed specifically for AI workloads, aiming to offer better performance or lower costs.
Major Investors Backing the Venture
The scale of the investment underscores the confidence venture capitalists have in Rao's vision and his ability to execute it. A $1 billion funding round for a new hardware company is substantial and signals a serious commitment to tackling a capital-intensive challenge. According to reports, Andreessen Horowitz, a prominent Silicon Valley venture firm, has agreed to lead the investment.
Other key participants include Lightspeed Venture Partners and Lux Capital, both of which have extensive experience in backing deep-tech and AI companies. Lux Capital was also an investor in Rao’s previous startup, MosaicML. Furthermore, Databricks, a data and AI company currently valued at $100 billion, is also reportedly investing in Unconventional, Inc., indicating strong support from Rao's most recent employer.
Funding in Installments
Sources indicate that Rao plans to raise the $1 billion in a “tranched” round. This means the capital will be provided in installments as the company meets specific milestones. He has reportedly already secured hundreds of millions of dollars, allowing the company to begin operations without waiting for the full round to close.
This funding structure is common for ambitious, long-term projects like developing new hardware. It allows investors to manage risk while providing the company with the necessary capital to scale its research, development, and manufacturing efforts over time. The venture capital firms mentioned in reports have not publicly commented on their involvement.
A Proven Track Record in AI Startups
Naveen Rao is a well-known figure in the AI industry with a history of building successful companies that were later acquired by tech giants. His experience provides a strong foundation for his latest venture and is a key reason for the significant investor interest.
MosaicML and Databricks
Most recently, Rao was the founder and CEO of MosaicML, a platform designed to help companies train and deploy large AI models more efficiently and affordably. Founded in 2020, MosaicML raised over $33 million from investors. In 2023, Databricks acquired the company for $1.3 billion. Following the acquisition, Rao joined Databricks as the Vice President of AI, a role he held for over two years before leaving in 2024 to start Unconventional, Inc.
Nervana Systems and Intel
Before MosaicML, Rao co-founded Nervana Systems in 2014. The company was one of the early pioneers in developing custom processors specifically for deep learning. In 2016, Intel acquired Nervana Systems for a reported $400 million, seeking to bolster its capabilities in the emerging AI chip market. Rao then spent several years at Intel leading its AI products group.
This pattern of identifying key technological shifts in AI and building valuable companies has established Rao as a credible and influential entrepreneur. His past successes suggest a deep understanding of both the technical and business challenges involved in creating new AI infrastructure. Investors are likely betting that he can replicate this success on an even larger scale with Unconventional, Inc.